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Mexico eases up on foreign investors

As a general rule, Mexico’s Commerce Code and Foreign Investment Law allow foreign businesses to operate in Mexico, but require such foreign businesses to first obtain an authorization from the Ministry of Economy (Secretaría de Economía). As a result of a new resolution (the “Resolution”), this general rule is now, to some extent, inapplicable.

Specifically, under NAFTA and certain other treaties entered with Chile, Costa Rica, Colombia, Nicaragua, El Salvador, Guatemala, Honduras, Uruguay, Japan, and Peru, Mexico agreed to treat foreign investors from Canada, the US and such other countries in a way that is not less favorable than the way it treats, under similar conditions, its domestic investors in matters relating to the establishment, acquisition, expansion, administration, operation, sale and disposition of their investments.

The elimination of the general rule as it applies to investors from the referenced countries is intended to foster foreign investment and facilitate the way business is done in Mexico. Pursuant to the Resolution, such foreign investors will be able to initiate operations in Mexico by (a) filing its articles of incorporation and a certificate of good standing, (b) designating a domicile within Mexico and (c) appointing a registered agent.

Foreign investors should note that the Resolution does not exempt them from having to comply with all other constitutional and legal restrictions and limitations, and that good business practice still requires them to seek legal advice in matters relating to the establishment, acquisition, expansion, administration, operation, sale and disposition of their investments in Mexico.